CBN orders banks to pay for dollar purchases 48hrs in advance

07 August 2015, Lagos — The Central Bank of Nigeria (CBN) on Thursday directed banks in the country to pay for their dollar purchases 48 hours in advance, as part of efforts to curb foreign exchange demand.

It was gathered that banks are now required to deposit the naira equivalent of their total forex bids to the CBN 48 hours in advance before its intervention.

This development took place a day after CBN officially barred banks in the country from accepting foreign currency cash deposits into customers’ domiciliary accounts.

The directive contained in a circular signed by the director of trade and exchange, Olakanmi Gbadamosi, stated that the apex bank action followed the decision of banks that have notified their customers that they would no longer accept foreign exchange cash deposits from them.

The apex bank also advised those who have deposited foreign currencies into their accounts before the directive to either withdraw the cash as they will not be allowed to transfer the funds.

Determined to stop illicit financial flows in the Nigerian banking system which aligns with the anti-money Laundering stance of the Federal Government, the CBN prohibited forthwith the acceptance of foreign currency cash deposits by DMBs.

The CBN emphasised that only wire transfers to and from Domiciliary Accounts are henceforth permissible.

Individuals wishing to source foreign currency for eligible and legitimate purposes such as BTA, PTA medical, mortgage, school fees, goods etc. were advised to do so through recognised channels with the use of Form ‘A’ for “invisible” and Form ‘M’ for “visible” transactions.

Before now, some banks including Fidelity Bank Plc, Guaranty Trust Bank Plc and Standard Chartered Bank, have already informed their customers they were going to stop receiving foreign currency cash deposit due to “lack of available foreign exchange cash outlets.”

After banks notified their customers on plans to stop receiving foreign currency cash deposit, the naira had appreciated against the dollar significantly.

It was also anticipated that the US dollar will further tumble against the naira at the parallel market in due course as Deposit Money Banks continue to reject cash deposit of foreign currencies into customers’ domiciliary accounts.*Sola Alabadan – Daily Independent